In India, there is 52.7% tax on cigarettes, 22% on ‘bidi’ and 63.8% on chewing tobacco. file | Photo Credit: PTI
Adequate increase in tax on all tobacco items and strong laws will not only bring out the best from human capital by ensuring better health of citizens, but also help in achieving Prime Minister Narendra Modi’s vision of a five trillion dollar economy by 2025, say experts Said claimed.
Noting that the healthcare burden due to tobacco consumption in India is about 1.04% of GDP, pushing many people into poverty, Arvind Mohan, Professor and Head, Department of Economics, Lucknow University, said these deadly A substantial increase in tax on goods would close the gap.
Speaking at a webinar, he echoed the views of the World Health Organization (WHO) as well as several other international bodies such as the World Bank that tobacco taxation is an efficient tool that can reduce tobacco consumption more than any other single measure. reduces rapidly.
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Shri Mohan pointed out that currently health is a major challenge for human development as at least 70% of the health expenditure is being borne by the people themselves, while only 25-30% is being borne by the government and global institutions.
“But if we are able to reduce this expenditure by taxing tobacco products, we will not only be able to tap our human resources but also increase the GDP manifold. This will help us achieve our dream of a $5 trillion economy. will also help to achieve.
Ahead of the Union Budget 2023-24, Mr. Mohan along with Dr. Pritam Dutta, Fellow, Delhi-based National Institute of Public Finance and Policy (NIPFP) and Rijo M. John, economist and public health policy analyst, also underlined that the Goods and Services Tax in 2017 One of the main arguments for introducing the Goods and Services Tax (GST) was that it would contribute 2% to GDP growth, but in reality this has not happened.
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Almost zero tax hike on sin products like tobacco is one of the major reasons during a conversation with senior journalist Shishir Sinha organized by ‘Tobacco Free India’, a forum of concerned citizens’ group.
Economists strongly suggested that the urgent need for fresh cash could be met by rising inflation, which has put the country’s budget under pressure, and by taxing demerit products such as tobacco.
Dr Dutta also talked about the reasons for low taxation on tobacco in the last five years since the implementation of the GST regime.
“If we take the proportion of all taxes on tobacco – central and states – it would be around 1.7% of the total tax collection in India, while our study showed it was 2.3% in 2014,” he said.
Mr. John strongly felt that taxation on tobacco can be a very effective tool to generate revenue as the product is of elastic nature, higher tax will not have any adverse effect on the revenue earnings of the government.
He further argued that India is among the 182 countries that have signed the WHO Framework Convention on Tobacco Control, which recommends a tax of at least 75% on the retail price of all tobacco products. However, India has a tax of 52.7% on cigarettes, 22% on bidis and 63.8% on chewable tobacco.
According to the Global Adult Tobacco Survey-India (GATS-2016-17), about 270 million adults aged 15 years and above use tobacco in some form or the other. India is the second largest consumer and third largest producer of tobacco.